Transitional provisions for vat Set off in case of construction of residential complex service

[Subodh Modak]

Under maharashtra value added tax developers and builders were not allowed any Set off. The incomplete work is carried forward as work in progress. Do they will be entitled for credit of vat amount paid in last 12 months? And the Central exise amount paid separately or otherwise ? Please clarify

[KASTURI SETHI]

In case VAT returns have no closing balance of input credit on account of VAT, they cannot carry forward via TRANS-1. However, the issue is worth raising to the Board. If you fight legally you may get deemed credit. You must apply for such benefit to the Chairman GST Council or Finance Minister direct.

[Subodh Modak]

Sir thanks for sharing ur views. The wip is a stock in trade the sell of which will be taxed under gst. The inputs involved there in should get a credit for the period from 1st july 2016 to 30th June 2017. I agree the law position is not clear. But since a very small practioner I am not aware how to further proceed in the issues. Kindly explain the Set procedure of law accordingly steps will be taken

[Rajagopalan Ranganathan]

Sir,

According to Section 140 (1) (iii) of Maharashtra Goods and Services Tax Act, 2017 "the registered person shall not be allowed to take credit where the said amount of credit relates to units not entitled to claim set-off under rule 79 of the Maharashtra Value Added Tax Rules, 2005 ."

You have stated that under Maharashtra value added tax developers and builders were not allowed any Set off. Therefore in view of the above provision you will not be entitled for credit of vat amount paid in last 12 months.

Under CGST Act, 2017Section 140 (1) (iii) states that "the registered person shall not be allowed to take credit where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government."

There is a difference between the CGST Act and Maharashtra SGST Act, 2017. As far as CENVAT credit is concerned you are not entitled to the credit provided the same is notified as not eligible. Otherwise it is allowable.

[KASTURI SETHI]

Dear Querist,

Govt. of India vide letter D.O..24/CH(EC)/2017 Dated 25th August, 2017 addressed to all officers of the department has invited suggestions on the issue of 'transition' E-mail : [email protected]. You can also send your suggestion.

AI Summary

VAT transitional set-off may be barred where prior regime disallowed input credits, limiting carryforward and prompting administrative recourse. Where prior VAT returns show no closing input credit balance, credit cannot be carried forward via TRANS-1, and transitional provisions bar set-off for amounts relating to supplies or units excluded from VAT set-off under the earlier rules; central transitional rules similarly exclude credits tied to notified exemptions, while CENVAT credit may be allowable unless specifically disallowed, so administrative representations may be pursued for relief.